AMD Earnings: The Forever #2 and that is okay.

After a solid couple of months, AMD rode into earnings with momentum & high expectations.

Author

Chris Gore
August 06, 2025

While working as a Merrill Lynch floor clerk at the NYSE in the early 2000’s, on occasion I covered AMD (Advanced Micro Devices). A semiconductor trader would call in an order to buy a large block of AMD stock and I would relay the order to the Floor Broker with instructions on how best to execute the trade. In turn, the broker would either buy the stock all at once or buy half now and buy the other half later. So for awhile, I have been very familiar with AMD as a company, its strengths and weaknesses, along with how the stock trades.

Back in those days, AMD was engaged in a head on competition in the (CPU) Central Processing Unit market with tech heavyweight, Intel. However, this wasn’t much of a competition. Intel held an almost 80% market share in the Desktop/Laptop processing unit market (see chart below). If I was in the market to purchase a new laptop, I would automatically look for an Intel-processed laptop. Why? Human nature. The Intel brand was so powerful at the time. Why would I try something new?

Google Finance

Fast forward to now and AMD is still #2 but we are not talking about the CPU market. AMD is #2 in the prominent GPU (Graphic Processing Units) market. But first, what are GPU’s?

GPUs: The Unsung Hero Powering AI

Think of a computer’s brain. The CPU is the general manager that is good at handling a wide array of mundane tasks. However, GPUs are the special sauce of a computer’s brain. It handles the intensive job of graphics in video games and even more exciting, the powering of artificial intelligence (AI). GPUs do the complex calculations to train the LLMs (Large Language Models). Just as a powerful engine is crucial for a race car, powerful GPUs are essential for driving AI technology

DeJa Vu? AMD chasing the Leader in the GPU Arena

As I stated in the beginning, in the early 2000’s the battle for dominance in the CPU market saw AMD playing second fiddle to Intel. Fast forward to today and we see the same dynamic unfolding in the GPU market. Who is the number one dominant player? NVIDIA, of course! Nvidia currently holds the leading position within the Data Center GPU market. They are the go-to-choice for most AI applications due the power and performance of their chips. Data Centers are the the primary customers for these high-end, AI-focused GPUs and Nvidia has a significant lead here. Nvidia simply can’t make enough GPUs to satisfy demand. For AMD, it is quite the familiar story of a determined #2 striving to close the gap on an established leader. For Q2, was AMD able to perform exceptionally in the Data Center GPU segment to give Nvidia concern? Let’s get to the numbers and take a look.

The Results

The Headline Numbers

The report was solid but was mixed in some key areas.

  • Q2 Revenues: Actual: $7.66B vs. Est. $7.43B (Beat)

  • Q2 Earnings: EPS Actual: $.48 vs Est. $.48 (In-Line)

  • Q2 Data Center Revenue: $3.2B (+14% YoY) DOWN 2 straight Qtrs.

  • Gross Margin: Actual: 43% vs. Est. 54%

  • Q3 Revenue Guidance: $8.7B vs Consensus $8.3B (UP)

Main Takeaway

There is a reason I highlighted Data Center (DC)performance. There were sky high expectations for AMD coming into this report. The market’s reaction to AMD earnings will always come down to DC. This is the world we are living in. It’s all about artificial intelligence. DC revenue was down 12% from the previous quarter and has been down for a second quarter in a row and up ONLY 14% year over year (YoY). What worries The Street is this becoming a trend. Think about the rapid DC expansion we have had in the last year due to A.I. implementation. For AMD to be up only 14% YoY is discouraging for shareholders. In Wednesday trading, AMD closed down 6.5% while Nvidia ended the day mostly unchanged, up .65%. If AMD has a lukewarm earnings report, that bolds well for Nvidia earnings which will be released the last week of August.

The chart below depicts just how dominant Nvidia has been in the Data Center space over the last few years with (YoY) growth. From the charts, it looks like AMD will never surpass Nvidia. Too Dominant. Guess what? AMD doesn’t need to.

My Thoughts

I’m not one to advocate for someone to be okay with being #2, but for AMD, second place is a bit different.

Even as AMD tries to navigate thru a space where Nvidia holds a dominant position in the data center AI market, as an investor, it’s crucial to understand AMD does not need to be the #1 player. The global AI Data Center market is currently valued at over $17 billion and that amount is projected to reach $165 billion by 2034! Remember, there are only 2 players in the GPU market. Only 2. This massive expansion in growth, even a smaller market share, can translate into a rapid revenue stream for AMD. AMD has their own next generation GPU chip, MI350 set to be released in Q3. The MI350 is a significant leap forward for AMD and is designed to compete directly with Nvidia’s high-end H100 chip. So despite the mixed earnings, all is not lost. AMD was punished because the report was good but not great. For AMD to be in an area where growth is expected to increase 10x’s while successfully generating billions in sales, maybe the #2 spot isn’t so bad after all.